The Importance of Performance Appraisal: 6 reasons why companies should appraise their employees

importancia de la evaluación de desempeño

Performance evaluation is a very useful tool for companies, since it allows managers and the Human Resources area to know how their employees are working and what are the problems within the organization. Performance evaluation has several objectives: to verify the fulfillment of individual and group goals, to observe the performance of employees and to obtain information for decision making in human resource management. In this article you will learn why it is important to evaluate the performance of your employees and what are the six fundamental reasons for your business to make use of this tool.

6 reasons to start now with performance appraisal

1. Implement a structured employee appraisal process

Measuring job performance is a process that provides security for companies, since it allows managers and Human Resources to know how their employees are working and what the problems are within the organization.

Before starting a personnel evaluation process, you must have worked together with the leaders of the organization to establish the objectives of each employee and how they work in function of the organization’s objective. We recommend using the OKR’s methodology, a work by objectives strategy used by large companies such as Google.

Once you have established the objectives, it is time to implement an evaluation system to know what are the skills of each employee, to identify if a worker performs his functions successfully, data and evidence are needed to show the fulfillment of the specific objective for that position.

According to Larry Page, CEO of Google, the success of performance evaluation is that everyone is committed to the shared success objectives, in order to give the maximum result. Once you have a structured appraisal system in place, all employees will know that their activities are valued and will be better able to perform both individually and collectively. Inform all employees how and how often they will be measured and their role within the company’s purpose.

2. Improve employee engagement

One of the main reasons for employee attrition is employee commitment to the company. Performance appraisal allows us to measure how committed employees are to the company and how satisfied they are. In this way, you can improve working conditions in your organization for those who are more engaged in the workplace.

This satisfaction indicator helps organizations make decisions regarding employee retention and recruitment. A 2011 study by TNS Gallup shows that happy people work more productively and are less likely to leave their jobs.

So if you want to improve employee engagement, you need to start measuring it. Companies that evaluate the performance of professionals are the most competitive in the market. This is because they have a reliable source for making decisions about the retention and hiring of their workers, as well as their status within the team.

3. Motivate employees to achieve their objectives.

An important point in the performance of teams is motivation. Linked to the previous point, a motivated employee will have a higher level of commitment, higher productivity and will be less likely to leave his or her job.

This is one of the main challenges facing organizations since COVID19 quarantines began. Mental exhaustion (burnout), work stress and work-family balance represent one of the main points of attention for organizations.

According to a study on mental health conducted in 2021 by Ginger, shows that 80% of CEO’s surveyed consider that poor mental health negatively impacts employee productivity, while 95% of employees think that companies that support their mental health help them feel more motivated, less stressed and more productive at work. In addition, the study concluded that since 2019, 76% of employees have received mental health support virtually. 48% have used technology-based mental health products.

For this reason, it is important that your organization invests in tools or processes that take care not only of the physical health, but also the mental health of employees. In addition, you should implement in your performance evaluation system, a way to measure employee motivation in order to determine if the processes and tools you are using to take care of the motivation of your employees are the right ones.

4. Track and monitor performance over time.

The performance evaluation system helps you monitor the results of employees within the organization and see their evolution within the company. Measurement should be constant and results should be evaluated periodically.

The goal of periodic performance evaluation is to determine if expectations are being met and to identify any opportunities for improvement. This also allows employers to reward those who have excelled or give constructive feedback on areas that need improvement. In addition, it provides a benchmark against which future evaluations can be measured, allowing managers to compare an individual’s progress over a period.

By evaluating performance over time, you can identify whether your investment in human talent development is paying off by maintaining motivation and performance. Regardless of the number of employees in the company, everyone needs to be evaluated to determine their progress. It is important not to go overboard in the long term or try to make drastic changes during the intermediate stages. The only way to identify real problems is to make continuous evaluations.

5. Obtain regular feedback and promote conversations between leaders and employees.

An environment where conversations between team leaders and their work teams are encouraged is a space that fosters trust, motivation and continuous improvement of employees. In order for an employee to improve and get out of their comfort zone, they must get feedback on their performance.

With the advent of remote work and work methodologies by objectives, it has become necessary to implement processes that allow feedback to be obtained quickly: daily or weekly. These conversation spaces are important to build trust between employees and their leaders, since the objective of this meeting should focus on what impediments employees are having to achieve their objectives and how leaders can help them to meet them.

There are two methodologies that are important nowadays to hold continuous conversation and feedback spaces: the daily’s and the 1:1 (one to one).

Daily’s: daily’s are spaces of a maximum of fifteen minutes where leaders and collaborators discuss issues that concern them, review objectives and points of friction they have had to achieve them.
One to One: the one-to-one is an individual and private meeting, of a maximum of half an hour, where the leader meets with a member of his team to evaluate individual performance on the objectives, propose improvement actions and obtain recognition for the achievements.

6. Generate an accurate and unbiased report for managers.

Finally, performance appraisal allows managers to obtain an overview of their team’s performance while avoiding the bias that could be generated by personal opinions. The evaluation ensures that decisions are made based on facts, not on the personal opinion of the manager or the manager’s subordinates. While it is important to promote an atmosphere of empathy and teamwork, these aspects should be evaluated by other team members or allied areas within the organization.


You now know that performance appraisal is an important tool for assessing your team’s performance and measuring their commitment. It also helps leaders have conversations with the rest of the work team to discuss goals, expectations and how well they are being achieved.

If you want to measure employee engagement or find out what motivates employees so you can help drive productivity in the workplace, spend time implementing your own performance appraisal system based on your goals and needs. The change in your work culture will be amazing and you’ll notice big changes in the organization’s bottom line.

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